Posts Tagged ‘federal budget’

Where is Canada going in its somewhat reluctant role as a development donor? The announcement in last week’s federal budget of the absorption of the Canadian International Development Agency (CIDA) into the Department of Foreign Affairs and International Trade (DFAIT) is a curiosity.

What is curious is the a) necessity of the takeover — CIDA was always a Crown corporation attached to DFAIT and b) the seeming lack of understanding in the Pearson building that taking over CIDA means that they will now be consumed by the development business at some cost to whatever global political agenda they may have.

Maintaining the flow of development dollars trumps diplomacy every time. DFAIT is now trapped into becoming a CIDA writ large. The Pearson building now will have to dedicate its energy not to foreign relations, but to the health of pregnant women in distant lands. The commandeered CIDA budget in short will dictate their overall priorities. And that, depending on your point of view, may be for the better.

But let’s start with the status quo ante.

DFAIT has been living off past glories for a long time. Modern communications and an ever expansive foreign policy role for the Prime Minister’s Office (both under Liberal and Conservative governments) have long restricted any meaningful policy role for DFAIT.

Truth is foreign affairs officers manage buildings in countries in order to provide a workable space for, in order of importance, Immigration, CIDA, and department of Defence officials. As to development issues, they know something, but not more other than the CIDA budget is four times the size of DFAIT’s.

CIDA was created because the mandarins of External Affairs thought they were wasting too much time on third world countries, time better spent in Paris, London, and Washington.

On the other hand, on the international stage, CIDA punches above its weight. The problem is its weight is about 85 pounds.

As Canada was never a colonial power, it has never felt any post-colonial guilt, and the development budget reflects that, even if it was Lester Pearson who came up with the fairy dust target of 0.7 percent of western country budgets dedicated to aid.

There is no doubt that the agency is beset by numerous design flaws, not the least of which is a scandalous reluctance to hire and promote immigrant Canadians who actually speak the languages and understand the cultures of the countries in which CIDA operates.

It’s also beset not by the absence of clear development objectives and accountabilities, but by a proliferation of them over the years.

In its early days, CIDA fed a host of Liberal-friendly domestic NGOs, although recently it has been far better balanced between local pork and real international assistance. Maternal care as per the Muskoka Declaration is now the key priority, but not much thought has gone into the question of how do you assist kids you have helped keep alive after they are five.

The complete untying of aid under Bev Oda is a policy landmark for which she received scant credit. Since then, CIDA has paid far more attention to Canadian businesses abroad (who are investing sustainable money and creating jobs), than DFAIT.

The cynic in me suspects what is really behind this budget move is that DFAIT has not so secretly coveted CIDA’s budget. Conferences are held in Bali on development issues not on keeping pigeons out of the rain gutters of embassy buildings. The UN wants to talk to Canadians about its annual contribution, currently funded by CIDA, not what we think about peace in the Middle East.

The current political flux, with a caretaker minister at the helm of CIDA and a powerful minister of foreign affairs, makes this move look like a well-timed bank heist.

That said, the optimist in me hopes that the move, as done for example by the US in realigning USAID and the State Department, will give development a higher political priority within the Harper government.

Development, intelligently done, should be a major policy concern for any Canadian government, and not just a plaything for bureaucrats looking for UN jobs and NGOs after a steady stream of airline tickets. A lot of serious thinking has gone into development economics much of it on governance and education as the key drivers of change, all of which has yet to appear seriously in official policy.

The reason development has a reputation for ineffectiveness is largely because the scope of the challenge was grossly under-estimated and the means to address the obstacles to growth largely misunderstood.

Ask yourself if we have failed in a hundred years to address poverty on First Nations reserves, why would anyone think Canada could succeed in an African or Bangladeshi village?

In recent years, CIDA has made progress towards greater international and domestic relevance but not enough to satisfy a suspicious political establishment and a skeptical public.

In his book, While Canada Slept: How We Lost Our Place in the World, Andrew Cohen does a good thing in lamenting and trying to correct Canadian apathy about the rest of the world.

I do not share Cohen’s vision of Trudeau internationalism, but when hundreds of people wash up on our shores clearly we cannot afford the complacency of thinking we live in Fortress North America. And, at the risk of sounding like a scold, somewhere in the mess of development there is a simple moral duty to help those in need.

Whether the development portfolio now sinks into obscurity or whether it leads Canada’s engagement with the emerging countries of the world, remains a question.

Canada could do with a serious re-thinking of its development plans. The UK and Sweden have done it, and are making some worthwhile new initiatives.

A bright idea might be to make the merged organization into the Department of International Development and Foreign Affairs. Perhaps this takeover will spur just that.

What a difference a recession makes. For Stephen Harper, previous federal budgets were like chess games that showcased his tactical savvy. This time it’s his high-wire skills that will be on display as he and his minister of finance walk a fine line between conflicting political and economic considerations — without a safety net.

Not only will they have to finesse a contradictory storyline of continued stimulus spending and sharp cuts; but they will have to balance the economic and fiscal needs of a country limping out of the recession with the political imperatives of a minority government gearing up for a possible fall vote.

It’s a safe bet that they will turn to the same budget playbook that is helping them set a longevity record for minority governments in this country.

In their first four budgets, tax and program spending measures targeted critical Conservative demographics with surgical precision. And while boutique politics is nothing new in Canada, the level of market segmentation and the number of sugar pills in each of the first four Conservative budgets were probably unmatched in Canadian history.

Many of those measures—from tax credits for hockey moms and home renovations, to tax deductions for truckers’ meals–were carefully calibrated to ensure the opprobrium of any number of demographic or interest groups for whatever party that threatened to defeat the budget (and the government).

This strategy provided political cover for the government as it moved its budgets through Parliament, and it helped build support among key groups and constituencies. But it had a third, perhaps more important advantage: it helped frame a sustaining storyline of sound economic management tempered by down-to-earth values.

While not particularly significant from an economic or policy perspective, the government’s Timbit strategy (sweet but not very healthy or nutritious) helped cement its brand as a party in touch with the main-street concerns and values of ordinary Canadians.

Now with the multi-billion dollar surpluses that were the staple of federal budgets over most of the last decade replaced by a $56-billion deficit, will the government change its tune and its tactics?

Not likely.

The strategy of market segmentation and targeting that served it in previous budgets will be showcased again this week, only this time to help tell a story of restraint.

Expect the narrative to revolve around three principal themes:

Safeguarding a fragile recovery

Fiscal balance (without tax increases or cuts to transfers)

Living within our means

We know that the government will not close the taps on billions of stimulus dollars already earmarked for projects across the country. And the prime minister has said the government removed transfers to the provinces from the chopping block (although recent statements suggest it may be looking for some wiggle-room).

Expect the real action to be on the non-stimulus expenditure side, as the prime minister and his minister of finance display their skills at “slicing and dicing”.

With up to 80 per cent of the federal budget funding salaries, social benefits and provincial transfers, government operations along with grants and contributions are the likely targets.

In 2008 the government undertook strategic review exercises for selected departments, with each required to identify up to 10 per cent (though only 5 percent would be expected to shift) of their budget for reallocation.

This week’s budget could well be when the results of that review become apparent.

First, we can expect the government to try to rein in the federal public service pension plan. That move, in addition to providing long-term structural savings, would play well to the Conservative base and support the government’s new “living within our means” storyline.

A fiscal sidebar to cuts to public service benefits could well see MPs pensions and benefits also cut. Such a move would reinforce the government’s narrative and draw a line in the sand for Opposition parties that might be tempted to vote against the budget.

Second, the government will look to reduce its institutional liabilities to the many organizations it supports. This could mean cuts to institutions ranging from the CBC to obscure boards, commissions, councils and agencies.

Here too expect laser-like targeting in support of the new narrative.

As the federal government prepares to tell Canadian households that, like them, it too will have to cut spending to balance its books, no department should consider itself immune; no agency should consider itself indispensable; and no grantee should fail to have a back-up plan.

In the new narrative being written in Ottawa, anyone who opposes the budget risks being branded as out of touch with ordinary Canadians or, worse still, fighting for their entitlements.